4 Budgeting Methods to Try

Just like there are different strategies and methods for paying off debt, there are different strategies and methods for budgeting money. There are strategies business follow to budget, and there are strategies people follow to budget their personal finances. This is actually a good thing! Since budgeting isn’t one size fits all, having different options can ensure you find the right budgeting methods for your situation.

The one thing that doesn’t change? The fact that everyone needs to budget their money. Everyone needs a budgeting method to try, and ultimately thrive in. I’m going to share 4 common budgeting methods for you to give a go. The more options you have, the more opportunity you will have to find the strategy that will be most successful for you.

Popular budgeting methods to try

#1 50/30/20 Budgeting

The 50/30/20 budgeting method is very popular. In fact, I taught this strategy in the Budgeting to Billions online training program. Essentially, this budgeting method states that 50% of your income should go to living expenses (rent, groceries, minimum debt payments, etc.). 30% of your income should go to lifestyle expenses (nails, hair, gym, discretionary spending). 20% of your income should go to savings and/or additional debt repayments.

That simple! Leveraging your total monthly take home income, you should be able to figure out how much should be allocated to each of the categories. Once you have that information, you can adjust your spending, expenses and savings to ensure you are as close as possible. The only issue is if you spend more than you make. 50 + 30 + 20 = 100. If you spend 110% of your income, the formula doesn’t work.

#2 Zero-Based Budgeting

Zero-based budgeting is the method I follow, and the method I teach my one-on-one clients to follow. It says that every dollar should have a place, leaving you with zero at the end of each month. Basically, you take your starting monthly income, and divide it into categories. After all categories are accounted for and have money allocated to them, you should have zero left over at the end of the month.

While I don’t budget my income or my client’s income down to the “tee”, I do budget for “wiggle room”. This means that a certain amount is designated to fluctuating categories. If no budget categories fluctuate, then the money goes to savings, still leaving the client with zero at the end of the month.

#3 Envelope Budgeting

Also referred to as “Cash Only Budgeting”, the envelope method requires you to use actual cash for your monthly spending. How this method works is you allocate your money to your separate spending categories and then withdrawal cash out from your bank account. You then put the cash in envelopes labeled to match your categories.

Ideally, once the cash in your envelopes is gone, you are done spending in that category until the next pay day. This is a great option for people who don’t have self-control when swiping debt or credit cards. This method ensures you only spend what you have available to spend.

#4 60% Budgeting Solution

The 60% budgeting method functions similarly to the 50/30/20 budgeting method, in which it uses percentages to manage your finances rather than specific dollar amounts. This method was first proposed by previous editor-in-chief of MSN Money, Richard Jenkins. His theory is that 60% of your income is used for “committed expenses.” These include your mortgage, food, basic clothing, car payments, insurance, etc.

The remaining 40% of your income is designated to four categories at 10% each: Long-term savings (like an emergency fund), short-term savings (like a savings account linked to your checking for easy access), retirement (401k plan or IRA), and fun money. If this method is followed, technically you only see 70% of your income and shouldn’t even miss the rest.

Related: Let Raya Create a Budget for You Today!


While any of these budgeting methods can work for any one individual, the true work comes from the individual themselves. The person setting the budgeting method has to follow it. They have to control their spending, be disciplined in their money-saving efforts, and stay focused on the end goal. Budgeting is a life-long process and it doesn’t matter how much or how little you make. Do you follow any of the budgeting methods above? How do you budget your money? Leave a comment below to share!

The CGS Team



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